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NEWS RELEASE
Feb 10, 2004


CONTACT: Carmen Balber - 310-392-0522 x324

FPPC Should Investigate Schwarzenegger's Initiative Advertisements & $2 Million Transfer, Group Says

Advertisements Fail to Disclose True Source of Funding
Santa Monica, CA -- Governor Schwarzenegger's campaign to pass Propositions 57 and 58 illegally circumvents voter approved campaign finance law in order to hide the true source of donors, according to a complaint from consumer advocates to the California Fair Political Practices Commission (FPPC). The nonprofit, nonpartisan Foundation for Taxpayer and Consumer Rights (FTCR) asked the FPPC to review the funding practices of Schwarzenegger's committees and ensure that future advertisements comply with the law.

State law requires that ballot initiative advertisements clearly state the major economic or special interest that is funding the advertisement. Advertisements in support of Proposition 57 and 58 (the bond and budget initiatives) state that major funding for the campaign is provided by Governor Schwarzenegger's California Recovery Team. According to FTCR's complaint, the Recovery Team committee, which has transferred $2 million to the Yes on 57 & 58 committee, has not properly identified its funding sources, primarily banking and development interests, insurance companies, hi-tech, media and energy interests. As a result, the public is being misled to believe that the funding for the campaign is Governor Schwarzenegger rather than the interests who have actually contributed to the campaign.

According to the complaint, Governor Schwarzenegger is using his committee structure "to launder campaign dollars into the "Californians for a Balanced Budget -- Yes on 57 & 58" committee in such a fashion that the source of funding for the ballot measures promoted by the Governor is hidden from the public. By taking these evasive actions, Governor Schwarzenegger has violated those sections of the Political Reform Act that require committees to reveal to voters the true source of funding behind a ballot measure."

The group also warned that Governor Schwarzenegger might be conspiring to continue this deception with a New York fundraiser in support of the ballot measures scheduled for February 24th. That fundraiser, at the home of Robert Wood Johnson IV, heir to the pharmaceutical giant Johnson & Johnson fortune, has been described as an opportunity for donors to become a co-chair of Schwarzenegger's California Recovery Team by contributing an unprecedented $500,000 in support of the ballot measures. FTCR is asking the FPPC to ensure that the campaign in support of Proposition 57 & 58 identifies the major funding sources regardless of which committee actually receives the donation.

FTCR, which has not taken a position on the initiatives, noted that Governor Schwarzengger may fear that revealing the true source of financial support may undermine the initiatives. Under the campaign finance law, a more appropriate tagline to advertisements promoting propositions 57 & 58 would read: "Sponsored by Californians for a Balanced Budget - Yes on 57 & 58; a coalition of banks, developers, insurance companies and energy firms. Major funding from American Sterling Corporation and Paul Folino, CEO of Emulex corporation."

"Disclosure laws exist to ensure that voters know which special interests are funding an initiative," said Carmen Balber of FTCR. "Just because the voters might think twice when they see who is really behind a ballot measure does not justify the Governor's deceptive fundraising tactics."

Read the complaint.


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